Social Capital and Dynamic Capability Driving Competitive Advantage: The Moderating Role of Corporate Governance

Abstract

In the search for factors that drive competitive advantage, this paper develops a framework that links a firm's capabilities and resources to its competitive advantage. The notion of governance is used as a supervisory mechanism for an organization's sources of competitive advantage. In light of empirical advancement, this paper examines panel data of 250 high technology firms from 2001 to 2009. The findings demonstrate that the impact of dynamic capability for production on competitive advantage is positive. However, the dynamic capability for R&D does not have a significant effect. Moreover, the social capital to build network relationships with a firm's partners emerges as essential in achieving competitive advantage. We also find that governance moderates the impact of dynamic capability and social capital on competitive advantage. The findings of this study have important management implications. Limitations of the study are considered and future research directions are identified.